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BP stops well work at Rhum field; Serica still committed to asset purchase

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BP stops well work at Rhum field; Serica still committed to asset purchase

Serica Energy PLC still intends to buy BP PLC 's interests in three North Sea fields despite the resumption of sanctions against Iran by the United States, according to a May 22 news release.

Iranian Oil Company (U.K.) Ltd, a subsidiary of the National Iranian Oil Company, holds a 50% stake in the Rhum field, one of the assets included in the pending deal.

BP has stopped work on the R3 well at Rhum as the potential implications of the sanctions on the acquisition deal, which was announced in November 2017, are evaluated.

The transaction consists of BP's 34.84%, 36% and 50% interests in the Keith, Bruce and Rhum fields, respectively.

In early May, President Donald Trump announced that the U.S. would withdraw from the 2015 Iran nuclear pact and that sanctions suspended under the deal would resume, leaving businesses that entered into contracts based on the agreement with either 90 days or 180 days to cease those operations.

"Serica and BP are both committed to resolving the issue of U.S. sanctions as they apply to Rhum with a view to enabling a timely completion of the BKR [Bruce, Keith and Rhum] transaction in the third quarter of 2018 and safeguarding ongoing operations. The deferral of work on the R3 well, pending resolution of the sanctions position, is not expected to impact the long-term recovery of Rhum reserves, nor the completion of the BKR transaction," the news release said.

Serica will pay BP an upfront payment of £12.8 million, a share of cash flows over the next four years, a consideration equivalent to 30% of BP's posttax decommissioning costs and other contingent payments dependent on future asset performance, bringing the total amount of the deal to about £300 million.